In brief

  • Tether received a ransom request for 500 Bitcoin on February 28.
  • The deadline for payment passed today, and Tether hasn't paid.

Stablecoin issuer Tether has revealed that it was subject to a 500 Bitcoin ($24 million) ransom demand but that it has refused to pay and let the deadline pass, according to a tweet thread today. 

On February 28, the ransom demand was set to the company, it stated. The person behind it threatened Tether with releasing information that would “harm the Bitcoin ecosystem” if the ransom wasn’t paid.

Tether chose not to pay the ransom, publicly replying, “We are not paying.” The tweet also contained the ransom sender’s blockchain address.

The stablecoin issuer said it was unsure whether this was an attempt at basic extortion, or if it was an attempt to harm Tether and the wider cryptocurrency community. “Either way, those seeking to harm Tether are getting increasingly desperate,” the company said

The company has since alerted law enforcement about the extortion attempt, and has stated that it will offer full support to the investigation behind this ransom attack. 

Multiple headaches to deal with

The ransom attack was not the only problem Tether encountered last week. 

On February 23, the New York Attorney General demanded Tether stop trading in New York, serving both Tether and Bitfinex with a $18.5 million fine. “Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” said Attorney General Letitia James. 

Going ahead, Tether will have to start providing regular reports on its business functions and must provide clear details on the funds it holds as reserves. The company must also provide public disclosures of the assets that back Tether, including loans from any other entities.

Previously, Bitfinex’s general counsel Stuart Hoegner told Decrypt that Tether’s reserves “may include, among other assets, treasury bills, time deposits, reverse repos, and commercial paper.” But the company so far has refused to comment on the amount of each component in its reserves.